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AI Stocks Plunge as Wall Street Questions the Boom, Is Anthropic’s IPO at Risk? · The Financial Exchange Show

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  Speaker 3: Well, it is Chuck, Mike, and Tucker with you here.
• 1:45
  Speaker 3: And as we kick things off.
• 1:48
  Speaker 3: We've got a little bit of a gnarly day here.
• 1:51
  Speaker 3: I mean, again, it's nothing huge. It's nothing crazy. But
• 1:56
  Speaker 3: continuing just away on tech, I guess if you're looking
• 1:59
  Speaker 3: at tech stocks, it's a little crazy. I mean, Intel's
• 2:02
  Speaker 3: down 27.75% right now, which is not good. SanDisk is
• 2:07
  Speaker 3: down 10. AMD's down 9. CoreWeave's down 9. SK Hynix
• 2:15
  Speaker 3: is down 7. I mean, like, again... Look, just look
• 2:18
  Speaker 3: at the semiconductors index. It's down like 7% on its own.
• 2:21
  Speaker 3: So that tells you all you need to know about
• 2:22
  Speaker 3: what's getting hit hardest today. So with that, the Dow
• 2:25
  Speaker 3: is off 278 points, about half a percent. S &
• 2:28
  Speaker 3: P is down 105 points, about 1.4%. And the Nasdaq
• 2:32
  Speaker 3: composite is down 579 points, about 2.2%. So it's a
• 2:39
  Speaker 3: tough day, tough sledding in markets broadly. The S & P, though,
• 2:42
  Speaker 3: only has 30 more stocks down than up today. So
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  Speaker 3: it's just those heavy ones. those heavy concentrated ones are
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  Speaker 3: the ones that are getting hit. If you take a look,
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  Speaker 3: I mean, just as an example, if you were to
• 2:56
  Speaker 3: look at the S & P 500 sectors, you've got
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  Speaker 3: five out of the 11 that are actually green. Energy's up,
• 3:04
  Speaker 3: staples are up, healthcare, utilities, real estate, it's basically everything's
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  Speaker 3: safe in that energy just because oil prices are moving up.
• 3:10
  Speaker 3: But Tech being 40% of the index and being down 4.25%.
• 3:15
  Speaker 3: That tells you the story of why the index is
• 3:17
  Speaker 3: down despite a lot of stocks being up. Something that
• 3:22
  Speaker 3: happened yesterday that we've never, ever seen.
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  Speaker 2: Before, Michael.
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  Speaker 5: Never?
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  Speaker 3: Never. I think it's never. Let me just check. I
• 3:31
  Speaker 3: want to make sure I have it quoted properly. This is, sorry,
• 3:35
  Speaker 3: not never, since 1990. So 37 years.
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  Speaker 5: A lot of times.
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  Speaker 6: So never since 1990.
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  Speaker 3: Never since 1990. There you go. Yes. 80% of S
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  Speaker 3: & P 500 stocks closed up.
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  Speaker 5: Okay.
• 3:51
  Speaker 3: And yet the S & P 500 was down. That
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  Speaker 3: has not happened in the last 37 years.
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  Speaker 4: Never.
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  Speaker 3: Never in the last 37 years. It has happened before that, maybe.
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  Speaker 3: I don't know. But the data that I see is
• 4:05
  Speaker 3: going back to 1990. Normally, the closest that we've come,
• 4:10
  Speaker 3: there was one other day where about 81% of stocks
• 4:13
  Speaker 3: closed up and we closed up only like 0.01%. But
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  Speaker 3: other than that, we've never seen this. generally when you
• 4:20
  Speaker 3: have never seen a market as concentrated as it is
• 4:23
  Speaker 3: now either so again kind of wild now we're not
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  Speaker 3: seeing that today again today's more of like a 50
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  Speaker 3: 50 split between s & p components that are up
• 4:31
  Speaker 3: versus down so it's it's not as skewed today as
• 4:34
  Speaker 3: it was yesterday but uh still like yesterday was pretty
• 4:38
  Speaker 3: notable there and that again i've i've been in this
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  Speaker 3: business for you know almost two decades 17 years this
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  Speaker 3: goes back you know twice as long as that and
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  Speaker 3: It hasn't happened.
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  Speaker 5: So it was a busy week, Chuck.
• 4:50
  Speaker 4: We had earnings from three of the largest companies in
• 4:52
  Speaker 4: the world, Amazon, Microsoft, and Alphabet all reported.
• 4:55
  Speaker 5: We had a Federal Reserve.
• 4:56
  Speaker 4: Meeting and, well, non-interest rate announcement or non-move on interest
• 5:01
  Speaker 4: rate announcement.
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  Speaker 5: What are our... I don't know. Do we feel better
• 5:05
  Speaker 5: informed than we did to start the week? No.
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  Speaker 2: I don't.
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  Speaker 5: Here's why.
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  Speaker 4: In spite of all that data and information, I do
• 5:12
  Speaker 4: not feel better informed today than I was last Friday.
• 5:15
  Speaker 3: We're not.
• 5:16
  Speaker 5: We're not.
• 5:17
  Speaker 3: We have a different set of information now than before.
• 5:20
  Speaker 3: Whether it's right or not, I have no idea. Now,
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  Speaker 3: the Fed, I'm going to toss that out because, honestly,
• 5:25
  Speaker 3: this Fed meeting didn't matter. It was not a market mover.
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  Speaker 3: The stuff that moved markets was what we got from
• 5:30
  Speaker 3: tech company earnings. And here's where the market is now.
• 5:35
  Speaker 3: If you are spending more than you bring in in
• 5:38
  Speaker 3: free cash flow, we're going to punish you. If not,
• 5:42
  Speaker 3: you're going to be okay-ish, you know. If you are
• 5:47
  Speaker 3: selling chips and beating on earnings and revenue, not good enough.
• 5:52
  Speaker 3: Need a bigger margin of safety, so it's not good enough. Like,
• 5:54
  Speaker 3: earnings beats in the tech sector are getting pummeled. And
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  Speaker 3: so the story that we have right now is that
• 6:01
  Speaker 3: markets are starting to turn skeptical about the AI build-out
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  Speaker 3: going forward.
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  Speaker 4: Even some companies that are, again, you talked about spending
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  Speaker 4: all of your cash flow and then some, like Meta.
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  Speaker 4: is doing precisely that and arguably having some pretty solid
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  Speaker 4: success with what they're spending the money on.
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  Speaker 6: Sure.
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  Speaker 4: And it's not good enough. Stocks down 14% for the month.
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  Speaker 3: Even some of the AI adjacent stocks, Caterpillar was at $ 1, 068
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  Speaker 3: at the end of June. It's at 635 now because okay. Caterpillar,
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  Speaker 3: like again, it's, they make a bunch of heavy equipment
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  Speaker 3: that helps to man to build stuff. And so they're
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  Speaker 3: getting punished because of concerns about that. So I think
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  Speaker 3: that the market this week is saying, hey, we're not
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  Speaker 3: sure about this whole AI thing anymore. Does that mean
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  Speaker 3: that that view is right? No, like it might be
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  Speaker 3: completely wrong. And this is what I think is unfortunately
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  Speaker 3: going to be the case for the next 12 to
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  Speaker 3: 18 months is we're going to have some weeks like
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  Speaker 3: this where it's like, man, like these data points are bad. And,
• 7:07
  Speaker 3: and we, it like to, to quote, you know, Twitter,
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  Speaker 3: it's so over. And then we're going to have weeks
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  Speaker 3: where like, we get some other data points and man,
• 7:16
  Speaker 3: we're so back because it's like, when you see stocks
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  Speaker 3: moving five, 10% a day on again, like multi-trillion dollar companies,
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  Speaker 3: that is not healthy price action. That I got to
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  Speaker 3: be honest, the only other time that we've ever seen
• 7:39
  Speaker 3: anything like this is tech bubble. Now, it doesn't mean
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  Speaker 3: it's going to end like that, but that's the only
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  Speaker 3: time that you saw, again, at the time, like big
• 7:50
  Speaker 3: companies were like 500 billion, you know, the Cisco's of
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  Speaker 3: the world.
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  Speaker 2: Sure.
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  Speaker 3: And you'd see them move like five, 10% a day.
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  Speaker 3: And that was nutty. This like you have Google or
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  Speaker 3: Alphabet or whatever the heck they call themselves now. The
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  Speaker 3: house of Google. Thank you. Oh, Google.
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  Speaker 5: Is that Norm?
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  Speaker 3: Yeah, Tuck was playing that all day yesterday. You know,
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  Speaker 3: you've got Google dropping from, again, how big of a, okay,
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  Speaker 3: here we go. Yeah, it was a 12.5% day yesterday.
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  Speaker 3: That doesn't just happen. This is kind of wild. And
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  Speaker 3: yet the thing that's most amazing is that in the aggregate,
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  Speaker 3: investors still don't want to sell their stocks in any
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  Speaker 3: meaningful numbers.
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  Speaker 5: The S & P 500 is down one half of
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  Speaker 5: 1% in October.
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  Speaker 3: This is the remarkable thing. Yes, the S & P 500,
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  Speaker 3: month to date, which is going to be basically the
• 8:51
  Speaker 3: full month since there's no trading tomorrow for an observance
• 8:54
  Speaker 3: for Halloween and Saturday. The S & P 500 basically
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  Speaker 3: hasn't budged all month.
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  Speaker 5: Lots of ups and downs.
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  Speaker 3: The other thing that's wild, if we're talking about wildness,
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  Speaker 3: the S & P 500 equal weighted index is up
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  Speaker 3: 5% this month. So the average stock in the S
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  Speaker 3: & P 500, or the median stock in the S
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  Speaker 3: & P.
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  Speaker 5: 500, is average.
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  Speaker 3: Because actually, yeah, for equal weighted, you do that. The
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  Speaker 3: average stock is up this month. Even though, like, if
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  Speaker 3: you own anything tech-related, you're sitting there and you're going,
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  Speaker 3: when does it end? Like, it's just, it's been brutal.
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  Speaker 3: I mean, month to date. Like, this is what we're
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  Speaker 3: seeing right now. Again, I got to just show you
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  Speaker 3: the screen. I know that, you know.
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  Speaker 5: I had it up a minute ago.
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  Speaker 3: Month to date. Nvidia's down 10. Broadcom's down 7. Micron,
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  Speaker 3: 16 down. AMD, 16 down. Intel's down 45% in October.
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  Speaker 4: Wow.
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  Speaker 5: Google, 18.
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  Speaker 2: Meta, 14.
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  Speaker 3: Dell, 20. Arista Networks, 15. Sandisk, down 31%. Seagate Technology,
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  Speaker 3: down 28%. Again, it's just a bludgeoning in tech. But then,
• 10:09
  Speaker 3: the reason why the index hasn't fallen apart, that money
• 10:12
  Speaker 3: has not gone to cash. It's not gone to bonds.
• 10:16
  Speaker 3: The money has gone to Visa, which is up 15,
• 10:18
  Speaker 3: MasterCard up 15, Eli Lilly up 23, Walmart up 18,
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  Speaker 3: ExxonMobil up 14, Starbucks up 9, Apple up 4, AbbVie
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  Speaker 3: up 13, utilities as a whole up like 12.
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  Speaker 2: So....
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  Speaker 3: The money is not rotating out of stocks. It's just
• 10:35
  Speaker 3: rotating into different ones. And the good news, if you
• 10:38
  Speaker 3: are a tech investor, potential good news is that none
• 10:41
  Speaker 3: of these rotations have held for very long for the
• 10:43
  Speaker 3: last couple of months. It's just been violent move in
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  Speaker 3: one direction, violent move in the other. And maybe that's
• 10:50
  Speaker 3: what you end up seeing. You know, maybe by next week,
• 10:52
  Speaker 3: it's like, OK, like we're so back.
• 10:54
  Speaker 4: I will just I know I say this all the time,
• 10:56
  Speaker 4: but I will say it again. It would have been
• 10:59
  Speaker 4: easy over the course of the last three years to
• 11:01
  Speaker 4: suddenly find yourself hyper-exposed to the AI market. It would
• 11:10
  Speaker 4: be very easy for that to happen.
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  Speaker 5: Yes. Almost unintentionally.
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  Speaker 2: Yes.
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  Speaker 4: If you threw a dart at a tech stock over
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  Speaker 4: the course of the last three years, there's a pretty
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  Speaker 4: good chance.
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  Speaker 5: That you made a boatload of money. I mean, Michael.
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  Speaker 5: And I just think that when we're talking about a
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  Speaker 5: market moment.
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  Speaker 4: where we are seeing unheard of, uh, concentration, unheard of
• 11:32
  Speaker 4: volatility might be a good moment to take a step
• 11:35
  Speaker 4: back and just study what it is that you've done
• 11:39
  Speaker 4: over the last three years and see if you've got
• 11:42
  Speaker 4: risks that you weren't really aware of.
• 11:44
  Speaker 2: Yeah.
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  Speaker 3: Basically as, as long as you avoided like in terms
• 11:50
  Speaker 3: of like sizable tech stocks that people are actually familiar with,
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  Speaker 3: like not, uh, I'm not looking at, like, Fiserv, which,
• 11:56
  Speaker 3: you know, is like... If you're talking the big ones,
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  Speaker 3: the only ones that are down in the last... Which, again,
• 12:04
  Speaker 3: this is remarkable. Last three years. Something called... Actually, no,
• 12:08
  Speaker 3: that's not even... What the heck is Global Payments Incorporated?
• 12:10
  Speaker 5: I don't know.
• 12:11
  Speaker 3: Adobe's gotten crushed. It's basically Adobe, Intuit. Like, in terms
• 12:17
  Speaker 3: of the big ones that people know, those are the
• 12:18
  Speaker 3: ones that are down. Like, yes, there are others. You know.
• 12:23
  Speaker 4: Even if you invested in Intel for the last three years,
• 12:26
  Speaker 4: which is down 30% today, you've made 85% over the
• 12:30
  Speaker 4: last three years.
• 12:30
  Speaker 2: Yes.
• 12:31
  Speaker 5: So, again, that's just the message.
• 12:34
  Speaker 3: Now, the big thing, the market as a whole is
• 12:36
  Speaker 3: like that. You look at a three-year track record, and
• 12:38
  Speaker 3: generally you tend to make money in bull markets. So, yeah, it's... Again,
• 12:45
  Speaker 3: it's just that there's so much money tied up in tech, and.
• 12:50
  Speaker 3: Again, I don't know how this is going to play
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  Speaker 3: out the next 12 to 18 months, but this is it.
• 12:55
  Speaker 3: This is the shakeout period over that time. It's binary,
• 12:59
  Speaker 3: by the way. It's either we built too little compute capacity,
• 13:04
  Speaker 3: and we're going to need more, or we built too much,
• 13:07
  Speaker 3: and there are a ton of write-downs coming on all
• 13:09
  Speaker 3: of these chips that have been bought that are not
• 13:11
  Speaker 3: going to be worth the paper their orders are printed on.
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  Speaker 5: I don't know.
• 13:16
  Speaker 3: Let's take a quick break. When we return... Let's talk
• 13:21
  Speaker 3: a little bit about midterm elections. Yeah, they're coming up
• 13:24
  Speaker 3: on Tuesday. We've got a piece in The New York
• 13:26
  Speaker 3: Times that says why the markets don't care about midterms.
• 13:29
  Speaker 3: I'll tell you why they actually do.
• 13:31
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  Speaker 1: All right.
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  Speaker 3: Do you know that statistically, uh, there should actually be
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  Speaker 3: quite a few presidents that share dates of death. It's
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  Speaker 3: the inverse of the, Hey, if you're in a room
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  Speaker 3: with 30 people, how many, what are the odds that,
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  Speaker 3: you know, two of you share a birthday and people
• 15:20
  Speaker 3: are like, Oh, there's almost no chance. And it's actually like,
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  Speaker 3: you know, a pretty sizable chance that you do just
• 15:25
  Speaker 3: because of how the math works.
• 15:26
  Speaker 2: Yeah.
• 15:26
  Speaker 3: So likewise, if you look at the number of presidents
• 15:28
  Speaker 3: that have died, I think we have like 39, I
• 15:30
  Speaker 3: think it is maybe 40 now, uh, again, there's a
• 15:35
  Speaker 3: pretty good chance that at least one pair shares a
• 15:37
  Speaker 3: date of death and probably two. So there's that. Speaking
• 15:43
  Speaker 3: of politics, we've got elections, midterm elections next Tuesday. Mike,
• 15:48
  Speaker 3: there's a piece in the New York Times. It's titled
• 15:50
  Speaker 3: Why the Markets Don't Care About the Midterms. What does
• 15:53
  Speaker 3: it outline in here?
• 15:55
  Speaker 4: In spite of what was a fairly close race and
• 15:58
  Speaker 4: what a lot of people are questioning, By and large,
• 16:01
  Speaker 4: markets haven't reacted and oftentimes don't really react immediately to
• 16:07
  Speaker 4: the outcome of an election one way or another. Since 1930,
• 16:10
  Speaker 4: in the years after a president's political party lost control
• 16:14
  Speaker 4: of the House in the midterms, the S & P
• 16:16
  Speaker 4: or its predecessors rose an average of 8.8%. So I
• 16:23
  Speaker 4: think they're making the case that, hey, it's not that
• 16:25
  Speaker 4: statistically different.
• 16:28
  Speaker 3: Say that again?
• 16:29
  Speaker 4: So in the year after a president's political party lost
• 16:32
  Speaker 4: control of the House in the midterms, the S & P,
• 16:36
  Speaker 4: or the S & P hasn't been around forever, rose
• 16:39
  Speaker 4: an average of 8.8%. It did rise an average of
• 16:45
  Speaker 4: 14% in the year after all midterm elections.
• 16:48
  Speaker 3: I don't even know if that's going to be statistically significant.
• 16:50
  Speaker 3: It probably isn't with a sample size of like 25
• 16:52
  Speaker 3: on each side.
• 16:53
  Speaker 4: I think that's kind of my point is I don't
• 16:55
  Speaker 4: think that, as we talk about frequently, politics doesn't seem
• 17:00
  Speaker 4: to be what drives market returns in one direction or another.
• 17:03
  Speaker 3: Not in the long term, but I think it matters
• 17:05
  Speaker 3: for the next several months. And even you could make
• 17:09
  Speaker 3: a special case that it does matter for the next
• 17:11
  Speaker 3: year in this case.
• 17:11
  Speaker 5: Tell me.
• 17:12
  Speaker 3: Here's my case. Number one, if Democrats end up having
• 17:15
  Speaker 3: a strong showing and if they take not just the House,
• 17:18
  Speaker 3: but the Senate as well, which again, I have no idea.
• 17:22
  Speaker 4: Betting markets have that I think in the 75% range,
• 17:26
  Speaker 4: that specific outcome.
• 17:27
  Speaker 3: Which again, remember that betting markets also had the Brazilian
• 17:30
  Speaker 3: presidential election going one way and it went the other
• 17:33
  Speaker 3: earlier this week. So again, a 75% chance still means
• 17:36
  Speaker 3: that one out of four times the other thing happens.
• 17:38
  Speaker 3: So I'm going with, I don't know. But let's say
• 17:42
  Speaker 3: that you have that. One of the biggest industries that
• 17:46
  Speaker 3: has been bolstered by the president in the last two
• 17:49
  Speaker 3: years has been also the biggest one in the country now,
• 17:52
  Speaker 3: which is artificial intelligence, like the thing that is singularly
• 17:56
  Speaker 3: driving markets. And no one really likes artificial intelligence a lot.
• 18:00
  Speaker 3: Even if we like used a lot, it's still like
• 18:03
  Speaker 3: polls very badly. And you do wonder if a Democrat
• 18:06
  Speaker 3: controlled Congress would do anything to try to push back
• 18:11
  Speaker 3: against this, either in terms of They probably couldn't pass
• 18:13
  Speaker 3: any legislation that would actually be signed by the president,
• 18:16
  Speaker 3: so there's limited things there. But, hey, some of these
• 18:19
  Speaker 3: deals that have been signed by the White House, like
• 18:22
  Speaker 3: the Intel deal to take equity in the company, could
• 18:25
  Speaker 3: you see some of these things revisited with more congressional
• 18:28
  Speaker 3: oversight that maybe puts a damper on things?
• 18:31
  Speaker 2: Possible.
• 18:32
  Speaker 3: The other thing that I will say is that if
• 18:36
  Speaker 3: you look just at the overall build-out of AI over
• 18:39
  Speaker 3: the next year or so, there's an awful lot of
• 18:41
  Speaker 3: chatter at a state level about restrictions and moratoriums on
• 18:45
  Speaker 3: data center construction. Could further Democrat control of different state
• 18:51
  Speaker 3: legislatures or governorships affect how those end up being impacted? Possibly,
• 18:57
  Speaker 3: but even in Texas, you've got the Republican candidate for
• 19:01
  Speaker 3: governor who's now saying, okay, maybe we need to rethink
• 19:04
  Speaker 3: things on the data center side. So there's a whole
• 19:07
  Speaker 3: worm that's turning even at the state level. Finally, The
• 19:10
  Speaker 3: other thing I'll say, we do have a sample size
• 19:13
  Speaker 3: of one for previous President Trump midterms. It was 2018.
• 19:18
  Speaker 3: I say the year 2018 because the end of 2018
• 19:21
  Speaker 3: sucked in markets. Those of you who don't remember, I do.
• 19:26
  Speaker 3: That was the year that right around Christmas, Steve Mnuchin
• 19:28
  Speaker 3: had to get trotted out to say, hey, there's no
• 19:31
  Speaker 3: problem with the financial system as a whole. Everything is
• 19:34
  Speaker 3: healthy in the plumbing. And everyone woke up and was like,
• 19:37
  Speaker 3: Why are you telling us this? Like, should we be nervous?
• 19:41
  Speaker 3: Because equities had fallen like 20% almost in Q4 of 2018.
• 19:47
  Speaker 3: So it's not to say that you'll repeat because again,
• 19:49
  Speaker 3: sample size. of one, I don't think you put any
• 19:52
  Speaker 3: stock in that. But I bet investors are at least
• 19:55
  Speaker 3: having that in the back of their mind if the
• 19:56
  Speaker 3: House and Senate were to flip. To take a quick break,
• 20:00
  Speaker 3: we've got Wall Street Watch and Todd Lutzky joining us next.
• 20:09
  Speaker 2: Bringing the latest financial news straight to your radio every day.
• 20:13
  Speaker 2: It's the Financial Exchange on the Financial Exchange Radio Network.
• 20:19
  Speaker 2: Time now for Wall Street Watch. Tracking the stocks, the data,
• 20:23
  Speaker 2: and the headlines driving markets so far today. Right here
• 20:27
  Speaker 2: on the Financial Exchange Radio Network.
• 20:29
  Speaker 6: Tech selling off in a big way today. Following more
• 20:33
  Speaker 6: tech earnings from the likes of Amazon and Intel. That
• 20:37
  Speaker 6: stirred more concerns in the sector. Right now, the Dow
• 20:40
  Speaker 6: is down two-thirds of a percent or 324 points lower.
• 20:42
  Speaker 6: S & P 500 down 1.5% or 115 points off.
• 20:44
  Speaker 6: NASDAQ selling off 2.4% or 625 points lower. Russell 2000
• 20:46
  Speaker 6: is down about 1.5%. Tenure Treasury is down four basis
• 20:47
  Speaker 6: points at 4.9%. 4.3%, crude oil down, or excuse me,
• 21:04
  Speaker 6: up nearly 2%, trading at $ 103 a barrel, while Brent
• 21:08
  Speaker 6: is at $ 117 a barrel. Amazon reported third quarter results
• 21:12
  Speaker 6: that disappointed. Its aggressive AI spending also led to negative
• 21:17
  Speaker 6: free cash flow of $ 42.
• 21:18
  Speaker 2: 4 billion.
• 21:20
  Speaker 6: Amazon shares are clawing back earlier losses and are now
• 21:23
  Speaker 6: down just over 1%. However, Intel sinking 28% after the
• 21:25
  Speaker 6: chipmaker logged a lower profit in the third quarter and
• 21:31
  Speaker 6: offered weaker than expected guidance for the fourth quarter. And
• 21:35
  Speaker 6: several crypto stocks are seeing losses on the day following
• 21:38
  Speaker 6: one of the largest crypto hacks ever yesterday when Binance
• 21:41
  Speaker 6: reported about $ 6. 3 billion was impacted. Coinbase shares are down
• 21:47
  Speaker 6: about 13% while Robinhood is dropping by 8%. I'm Tucker Silva,
• 21:53
  Speaker 6: and that is Wall Street Watch. In the previous segment,
• 21:55
  Speaker 6: we asked you the trivia question, which former U.S. president
• 21:58
  Speaker 6: died on the same day as John Adams? That would
• 22:01
  Speaker 6: be Thomas Jefferson. And Ed in Norfolk, Mass., is our
• 22:05
  Speaker 6: winner today, taking home a Financial Exchange Show t-shirt. Congrats
• 22:09
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• 22:11
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• 22:16
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• 22:19
  Speaker 6: of the Disabled American Veterans Department of Massachusetts and the
• 22:22
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• 22:24
  Speaker 3: Of the DAV 5K. Mike, I know we've been talking
• 22:28
  Speaker 3: a lot about the potential anthropic IPO because the S-1
• 22:33
  Speaker 3: dropped on Monday, and so everyone's all hyped up about it.
• 22:37
  Speaker 3: But New York Times dealbook has a question here. Its
• 22:42
  Speaker 3: investors say Kalshi is worth $ 40 billion. Is an IPO next?
• 22:48
  Speaker 5: It might be.
• 22:50
  Speaker 4: And if they prove out to be able to operate
• 22:54
  Speaker 4: in any sort of legal fashion in the future, then
• 22:57
  Speaker 4: I don't doubt that it could be worth $ 40 billion.
• 22:59
  Speaker 4: But every day that goes by, it seems to me
• 23:01
  Speaker 4: that more and more states are suing this company. Utah
• 23:06
  Speaker 4: has filed criminal felony and misdemeanor charges against the company
• 23:10
  Speaker 4: and its co-founders. And more and more states are particularly
• 23:13
  Speaker 4: unhappy with how these companies are skirting. Well, I think
• 23:17
  Speaker 4: First and foremost, they're unhappy about the fact that they
• 23:19
  Speaker 4: don't get to collect any tax revenue on them.
• 23:22
  Speaker 5: But then as a secondary matter, they're not.
• 23:25
  Speaker 4: Terribly happy about the way in which they're behaving and
• 23:27
  Speaker 4: skirting their own laws around what sort of things are
• 23:29
  Speaker 4: allowed in their states when it comes to gambling.
• 23:31
  Speaker 3: Well, yeah, I mean, there are obvious questions about, hey,
• 23:34
  Speaker 3: like how many of the items on here are actually
• 23:37
  Speaker 3: sports gambling as opposed to prediction markets.
• 23:40
  Speaker 5: Sure.
• 23:41
  Speaker 3: Again, you can say it's a distinction without a difference,
• 23:44
  Speaker 3: but I think that there, in my mind, there's a
• 23:47
  Speaker 3: clear difference between like, hey, I've got the Bears with
• 23:50
  Speaker 3: seven points, and what do I think the price of
• 23:53
  Speaker 3: wheat is going to be six months from now?
• 23:55
  Speaker 5: Agreed.
• 23:58
  Speaker 3: Again, if we're just talking generally... When you think about
• 24:03
  Speaker 3: what we've historically had futures for, it's for stuff that's like.
• 24:06
  Speaker 5: It's commodities.
• 24:07
  Speaker 3: The reason why we have futures... The reason why oil
• 24:10
  Speaker 3: futures exist is because Jim Exxon wanted to sell oil
• 24:16
  Speaker 3: to Bill Mobile six months from now and needed a
• 24:21
  Speaker 3: way to settle that.
• 24:22
  Speaker 5: Or your home heating oil company.
• 24:26
  Speaker 4: wanted to be able to give you a contract guarantee
• 24:28
  Speaker 4: for the whole winter at a specific price, and needed
• 24:31
  Speaker 4: a mechanism to do it.
• 24:32
  Speaker 3: That was more of an outgrowth from that, but it's
• 24:34
  Speaker 3: much more like, hey, I'm producing a bunch of oil.
• 24:37
  Speaker 3: I'm not sure how much I'm going to be able
• 24:38
  Speaker 3: to sell it for. Who wants to be able to
• 24:40
  Speaker 3: buy my production out into the future? And buyers saying, well,
• 24:43
  Speaker 3: I'm nervous the price might go up, so sure, I'll
• 24:45
  Speaker 3: hedge doing that. It satisfies an economic need. There is
• 24:51
  Speaker 3: no reason. If I go to Kalshi's homepage right now, And, okay,
• 24:57
  Speaker 3: here we go. Like, oh, yeah, here's a good one. Actually, no,
• 25:03
  Speaker 3: I don't want to do that one. Let's do, where's
• 25:06
  Speaker 3: like something dumb? Okay, here we go. Mentions. Is there
• 25:11
  Speaker 3: any reason why there should be a futures contract for
• 25:16
  Speaker 3: whether Apple will say the word creator studio on their
• 25:19
  Speaker 3: next earnings call?
• 25:22
  Speaker 5: Not that I can envision, Chuck.
• 25:23
  Speaker 3: No, there is not. Is there any reason why?
• 25:28
  Speaker 4: I also just want to go a step further. Not
• 25:30
  Speaker 4: only is there no real reason to exist, but it
• 25:33
  Speaker 4: is ripe for the opportunity to manipulate based on some
• 25:38
  Speaker 4: insider at Apple placing a huge bet and then attempting
• 25:42
  Speaker 4: to work it into, I don't remember the new CEO's names,
• 25:47
  Speaker 4: next quarterly speech.
• 25:48
  Speaker 3: John Ternes.
• 25:49
  Speaker 5: Thank you.
• 25:50
  Speaker 3: Here's another one. On the Grand Theft Auto 6 album,
• 25:56
  Speaker 3: will there be a song by Young Thug on it?
• 26:00
  Speaker 3: Why is that something that, you don't need a futures
• 26:03
  Speaker 3: contract for that.
• 26:04
  Speaker 4: Okay, so I think we can agree that there's plenty
• 26:07
  Speaker 4: of things in society that may or may not need
• 26:10
  Speaker 4: to exist.
• 26:12
  Speaker 5: I think this goes a step further insofar as it is.
• 26:17
  Speaker 4: Also, I think you can call it a company that
• 26:21
  Speaker 4: might be having a net drag on society by getting
• 26:24
  Speaker 4: people addicted to gambling, which, again, we do that with
• 26:26
  Speaker 4: plenty of things. You can say that about alcohol, tobacco, casinos,
• 26:31
  Speaker 4: all these things. But if we're going to pretend that
• 26:35
  Speaker 4: it's all about commodity futures but allow them to sell
• 26:41
  Speaker 4: to gamblers... then we're doing society a disservice.
• 26:45
  Speaker 3: Again, I don't have a problem with gambling. I still
• 26:49
  Speaker 3: go to casinos. I've bet at sportsbooks in casinos, but
• 26:53
  Speaker 3: I have to go there. I don't just have it
• 26:55
  Speaker 3: sitting on my phone, sucking the life out of my
• 26:58
  Speaker 3: bank account.
• 26:59
  Speaker 5: Well, and even if you did, this.
• 27:04
  Speaker 4: Is worse than that because there are regulated ones where
• 27:07
  Speaker 4: you can do that and they at least have to
• 27:09
  Speaker 4: follow certain rules about their advertising. They at least have
• 27:12
  Speaker 4: to pay some of their tax revenue to the states
• 27:14
  Speaker 4: for the people who are losing boatloads of money to
• 27:17
  Speaker 4: promote gambling addiction help and things along those lines.
• 27:20
  Speaker 5: This is a step further.
• 27:21
  Speaker 4: It's yes, we are going to allow you to gamble
• 27:23
  Speaker 4: on your phone and we're not going to follow any
• 27:25
  Speaker 4: of the rules that the gambling sites have to follow.
• 27:28
  Speaker 5: I don't think either should be.
• 27:29
  Speaker 3: Legal, but I'm going to call a spade a spade
• 27:31
  Speaker 3: on this. Like These prediction market sites, they're just parasites.
• 27:37
  Speaker 3: They do not offer any redeeming value at all, in
• 27:40
  Speaker 3: my opinion. And if they disappeared tomorrow, I'd be fine
• 27:43
  Speaker 3: with it.
• 27:44
  Speaker 6: Giving assets to your children can be part of an
• 27:47
  Speaker 6: estate plan, but giving them away directly can create problems
• 27:51
  Speaker 6: you may not expect. Cushing and Dolan's new guide called
• 27:55
  Speaker 6: Making the Most of Gifting Assets explains what to consider
• 27:59
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• 28:02
  Speaker 3: And tomorrow, folks.
• 28:03
  Speaker 6: October 31st, Halloween, otherwise known as the last day of
• 28:06
  Speaker 6: the month. So this is your last chance to get
• 28:09
  Speaker 6: this guide from Cushing and Dolan. Once you give an
• 28:13
  Speaker 6: asset directly to someone else, it's no longer yours. You
• 28:16
  Speaker 6: may lose control over it. And if your child runs
• 28:18
  Speaker 6: into financial trouble or goes through a divorce, that asset
• 28:22
  Speaker 6: could be at risk. This new guide suggests ways to
• 28:26
  Speaker 6: pass along assets while keeping them better protected. So before
• 28:29
  Speaker 6: you give away property, investments, or other assets, Make sure
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• 28:37
  Speaker 6: Making the Most of Gifting Assets. And once again, it's
• 28:40
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• 28:45
  Speaker 3: That number again is 866-848-5699.
• 28:46
  Speaker 6: Or you can request the guide from their website.
• 28:54
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• 28:57
  Speaker 2: The proceeding was paid for and the views expressed are
• 28:58
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• 29:01
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• 29:04
  Speaker 2: Cushing and Armstrong do not endorse each other and are
• 29:06
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• 29:07
  Speaker 3: Let's take a quick break. When we return, Paul and
• 29:09
  Speaker 3: Monica from Barron's joins us next.
• 29:12
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• 29:15
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• 29:18
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• 29:27
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• 29:30
  Speaker 2: and gentlemen, The Weeknd.
• 30:01
  Speaker 3: As promised, we are now joined by the one, the only,
• 30:06
  Speaker 3: Paul and Monica from Barron's. Paul, how are you doing today?
• 30:10
  Speaker 7: I'm good, thanks.
• 30:11
  Speaker 3: How are you guys doing?
• 30:12
  Speaker 7: I hope you can hear me.
• 30:13
  Speaker 3: We can. You sound fantastic. And here's the deal. All week,
• 30:19
  Speaker 3: basically the last two weeks actually, Maybe I've just been
• 30:22
  Speaker 3: like in this AI bubble myself, but it's been basically
• 30:25
  Speaker 3: like all I can think about to the point where
• 30:27
  Speaker 3: I'm having trouble sleeping because of just how much is
• 30:30
  Speaker 3: changing in markets right now and just how much I
• 30:34
  Speaker 3: want to learn. You've got three different pieces that are
• 30:37
  Speaker 3: out this week, so it seems like you're in the
• 30:38
  Speaker 3: same boat as me. because one of them, I think,
• 30:43
  Speaker 3: really gets at just what we're talking about right now. Actually,
• 30:47
  Speaker 3: the two headlines, half of big money managers say the
• 30:50
  Speaker 3: AI boom has years left to run, and this IPO
• 30:53
  Speaker 3: boom is nothing like 1999. It might be riskier. I
• 30:57
  Speaker 3: think totally juxtapose the two ends, which are, hey, like,
• 31:02
  Speaker 3: No one has any idea where this is going, but
• 31:04
  Speaker 3: either we're going to way under build compute capacity or
• 31:06
  Speaker 3: way over build. And we're not going to know until
• 31:09
  Speaker 3: we're done with the next year or two.
• 31:11
  Speaker 7: Yeah, that that is, I think, a good way to
• 31:14
  Speaker 7: kind of wrap it up. There still is a lot
• 31:16
  Speaker 7: of optimism about how strong earnings should be. for many
• 31:22
  Speaker 7: tech companies, even though we're seeing some volatility this week
• 31:25
  Speaker 7: after Amazon and Meta and Microsoft, Alphabet, some of the
• 31:32
  Speaker 7: concerns there regarding results in the past few weeks and
• 31:36
  Speaker 7: what that says about AI spending and tech earnings. But
• 31:40
  Speaker 7: that being said, I don't think anyone would deny that
• 31:44
  Speaker 7: the AI spending is going to yield very strong profits
• 31:51
  Speaker 7: for chip companies, for other parts of the tech sector.
• 31:56
  Speaker 7: And that can help lift the entire market. But that
• 32:01
  Speaker 7: being said, people who've been around long enough remember all
• 32:05
  Speaker 7: of the hype about the dot-com spending and are worried
• 32:11
  Speaker 7: that there could be an inevitable bust that way as well.
• 32:14
  Speaker 7: And that comes just as anthropic as getting ready to
• 32:17
  Speaker 7: go public in a few weeks.
• 32:19
  Speaker 3: Again, the volatility that we're seeing right now, Paul, I
• 32:22
  Speaker 3: don't recall seeing single-name volatility like this in giant stocks
• 32:28
  Speaker 3: any other time, but basically the tech bubble or when
• 32:30
  Speaker 3: things have gotten kind of gnarly just on a market level.
• 32:33
  Speaker 3: But we're not seeing market-level disruption. It's all just single-name volatility.
• 32:39
  Speaker 3: Have you ever seen anything like this where Google loses
• 32:42
  Speaker 3: 12% one day and Intel's down 29% the next? It
• 32:47
  Speaker 3: is astonishing.
• 32:47
  Speaker 4: I think.
• 32:49
  Speaker 7: Haven't really seen this that I can remember in the
• 32:53
  Speaker 7: past few years. I think part of it is a
• 32:57
  Speaker 7: testament to just how much, how heavy exposure, arguably maybe
• 33:05
  Speaker 7: a little bit overdone that retail investors have to some
• 33:09
  Speaker 7: of these names, but also institutional investors. And I think
• 33:12
  Speaker 7: also you have a lot of these leveraged single stock
• 33:15
  Speaker 7: ETFs now that magnify some.
• 33:18
  Speaker 3: Of the moves as well.
• 33:20
  Speaker 7: So there clearly is a lot more volatility involved with
• 33:25
  Speaker 7: these mega cap names in a way that, you know,
• 33:27
  Speaker 7: in the past people would say, oh, well, don't worry
• 33:30
  Speaker 7: if you own like a giant stock in the Dow
• 33:32
  Speaker 7: or S & P 500. You know, they may go
• 33:34
  Speaker 7: up or down a little bit after earnings, but, you know,
• 33:37
  Speaker 7: they're not going to skyrocket or plummet double digits. That's
• 33:41
  Speaker 7: no longer the case, obviously.
• 33:43
  Speaker 3: So, Paul, this takes us to the $ 1. 5 trillion elephant
• 33:46
  Speaker 3: in the room, which is how do you IPO the
• 33:52
  Speaker 3: first pure play AI model company with tech markets behaving
• 33:59
  Speaker 3: like this? Who's going to buy it?
• 34:02
  Speaker 2: Yeah.
• 34:03
  Speaker 7: Obviously, there is a fair amount of time between now
• 34:09
  Speaker 7: and– mid-November, just before Thanksgiving, when Anthropic could potentially go public.
• 34:16
  Speaker 7: I think investors are still excited because the revenue growth,
• 34:21
  Speaker 7: while it's slowing, is still dramatic. And the company may
• 34:26
  Speaker 7: not be profitable on a net basis, but it's getting
• 34:29
  Speaker 7: closer to that potentially being something in the future for Anthropic.
• 34:36
  Speaker 7: And the operating numbers.
• 34:37
  Speaker 6: Look pretty strong as well.
• 34:40
  Speaker 7: You know, that, that being said, the, the big question
• 34:43
  Speaker 7: as you allude to is valuation. Can a company really
• 34:47
  Speaker 7: go public at a one and a half trillion dollar
• 34:50
  Speaker 7: valuation and, uh, and have decent gains, you know, or
• 34:53
  Speaker 7: have all the gains really been made, uh, you know,
• 34:56
  Speaker 7: the big gains in the private markets, which is why
• 34:58
  Speaker 7: I think some people are looking at ETFs that have
• 35:02
  Speaker 7: a private exposure, uh, to Anthropic and OpenAI as well,
• 35:06
  Speaker 7: which could go public next year, the chat GPT owner.
• 35:09
  Speaker 3: Paul, my view is basically that, look, no one knows
• 35:13
  Speaker 3: anything on this. People might have strong opinions on either side,
• 35:16
  Speaker 3: but it's basically going to take the next 12 to
• 35:19
  Speaker 3: 18 months to sort through the question of, are we
• 35:22
  Speaker 3: building enough compute capacity or, you know, are we building
• 35:26
  Speaker 3: way too much or not enough? Is that a reasonable
• 35:29
  Speaker 3: way to approach like the next year or so? Because
• 35:31
  Speaker 3: I don't think we're going to get an answer to
• 35:33
  Speaker 3: these questions by the end of, you know, 26 as
• 35:35
  Speaker 3: an example.
• 35:37
  Speaker 7: No, I don't think we will. And that is a
• 35:43
  Speaker 7: potential reason why investors should sit back a little bit.
• 35:48
  Speaker 7: You know, a company like Anthropic, much in the way
• 35:51
  Speaker 7: that SpaceX, you know, going public a few months ago,
• 35:54
  Speaker 7: you know, You don't have to necessarily rush in, given
• 36:00
  Speaker 7: that a lot of times these companies, when they go public,
• 36:03
  Speaker 7: their stocks are very volatile in the aftermarket for the
• 36:06
  Speaker 7: first few months or even a year. Someone who waited
• 36:10
  Speaker 7: on Facebook, for example, back when it was Facebook and
• 36:13
  Speaker 7: not meta platforms, did themselves a good service by not
• 36:18
  Speaker 7: rushing in on day one. And I think that that
• 36:21
  Speaker 7: might be the case for you know, anthropic and eventually open.
• 36:24
  Speaker 3: AI as well.
• 36:26
  Speaker 7: Just sit back and see what the trends are looking like.
• 36:30
  Speaker 2: And, you know.
• 36:31
  Speaker 7: If it turns out that there is going to be
• 36:34
  Speaker 7: more demand for compute, these companies will still have a
• 36:37
  Speaker 7: long runway of growth ahead.
• 36:39
  Speaker 3: Very good. Paul, we appreciate you joining us today. Thank
• 36:42
  Speaker 3: you so much for the time. And we'll catch up
• 36:44
  Speaker 3: with you soon.
• 36:45
  Speaker 2: Great.
• 36:46
  Speaker 7: Thanks a lot. Have a good one, guys.
• 36:47
  Speaker 3: That is Paul and Monica from Barron's talking about what's
• 36:50
  Speaker 3: going on in AI world. these days in markets. What
• 36:54
  Speaker 3: else you got for me, Mike?
• 36:55
  Speaker 4: A few areas in the, I don't know what category
• 36:58
  Speaker 4: I'd put this in, the online shopping fulfillment space or
• 37:03
  Speaker 4: mobile food ordering space.
• 37:05
  Speaker 5: So one, toast.
• 37:06
  Speaker 4: Is being sued by the FTC, local Boston company, if
• 37:09
  Speaker 4: you're unfamiliar, payment terminals at all sorts of restaurants and
• 37:13
  Speaker 4: places like that.
• 37:14
  Speaker 3: They're like OpenTable, basically, right? But they also incorporate payments
• 37:17
  Speaker 3: as well.
• 37:18
  Speaker 4: Yeah, so a lot of those screens that you get
• 37:20
  Speaker 4: flipped to you are actually toast machines.
• 37:24
  Speaker 3: That's what they started as, and then they started doing
• 37:26
  Speaker 3: reservations as well, I believe.
• 37:28
  Speaker 4: Yeah, so the allegations from the FTC is that toast
• 37:32
  Speaker 4: used False claims convince consumers to enroll in their subscription services,
• 37:37
  Speaker 4: alleging that the cost is zero and promises customer service.
• 37:41
  Speaker 4: The reality is that none of Toast's hardware costs $ 0,
• 37:44
  Speaker 4: and customers frequently claim that they cannot get customer support
• 37:48
  Speaker 4: of any sort at any.
• 37:48
  Speaker 5: Hour of the day.
• 37:49
  Speaker 4: That would seem to be problematic. Again, those are the allegations.
• 37:55
  Speaker 4: The question that Toast is asking is, does this law
• 37:58
  Speaker 4: actually apply to businesses as well as consumers, which is
• 38:01
  Speaker 4: an open question. And then The other one that I
• 38:03
  Speaker 4: saw just yesterday, Instacart and DoorDash, looking at a combination
• 38:08
  Speaker 4: of those two companies as they try to consolidate to
• 38:12
  Speaker 4: compete against everybody else that wants to do the same thing.
• 38:14
  Speaker 3: Instadash or DoorCart?
• 38:17
  Speaker 5: I'd go Instadash.
• 38:18
  Speaker 3: It's too fast.
• 38:19
  Speaker 2: Yeah.
• 38:20
  Speaker 5: Although I think DoorDash is the acquiring firm.
• 38:23
  Speaker 3: So it's probably going to be DoorDash.
• 38:25
  Speaker 5: Yeah.
• 38:25
  Speaker 3: Which is Maple Bear. Oh, no, Maple Bear is Instacart.
• 38:28
  Speaker 2: That's what it is.
• 38:29
  Speaker 6: That's the parent company.
• 38:30
  Speaker 1: Maple Bear.
• 38:31
  Speaker 4: Maple.
• 38:32
  Speaker 2: What?
• 38:33
  Speaker 3: I swear to God, look it up.
• 38:34
  Speaker 2: Maple Bear.
• 38:35
  Speaker 3: My goodness.
• 38:36
  Speaker 2: Silly.
• 38:37
  Speaker 3: File that one under things that I never knew that
• 38:40
  Speaker 3: I'm not sure I needed to know. A little fun
• 38:41
  Speaker 3: fact on a Friday. I appreciate that, Tucker.
• 38:44
  Speaker 2: You're welcome.
• 38:44
  Speaker 3: That's a good one. We're going to take a break
• 38:47
  Speaker 3: for the weekend. Hope you all have a great Halloween.
• 38:50
  Speaker 3: And it's okay to eat too much candy for this weekend.
• 38:54
  Speaker 3: We'll see you Monday.